A year ago my husband and I were living in a posh three-bedroom apartment, driving a 2002 Toyota and eating out twice a week. Now we live in a windowless basement, drive a Volvo wagon with over 260k, and allow ourselves to splurge on a coffee date twice a month.

We’re making more money per month now than we were last year, but moving from one of the cheapest places in the world to one of the most expensive places seriously changed our lifestyle. This move made us realize that local cost of living is much more important than the bottom line on any expat contract.

Xpatulator quarterly publishes an index of 282 international cities by cost of living. By comparing thirteen different categories including things like the cost of housing, groceries and recreation, Xpatulator ranks the cities from most expensive to least expensive.

According to the April 2010 rankings, here are the 10 cheapest international cities in the world.

1. Harare, Zimbabwe

While Harare ranks as the cheapest city in the world, there are numerous reasons why expats and travelers won’t be flocking there. Zimbabwe has a 94% unemployment rate and a major refugee problem due to the country’s financial collapse. In 2008 there was more than 150% inflation and the national currency was eventually ditched for the U.S. dollar.

Zimbabwe also scored pretty high on the Transparency.org’s 2009 corruption index with a rank of 146. If you’re not familiar with the rankings, keep in mind that New Zealand is 1 and Somalia is 180. The higher the number, the more corruption pervades every day life.

2. Tianjin, China

It’s not Beijing or Shanghai, but China’s sixth most-populous city is one of the cheapest places to live. Eating out is inexpensive and you can visit Beijing for a day trip, although the Tianjin expat scene is small and there aren’t really a lot of sights or attractions in the city.

3. Sana’a, Yemen

Sana’a, Yemen’s capital, is not only a cheap city to live in but also an excellent place to learn Arabic. Grocery and housing costs are some of the lowest in the world, although opportunities to experience nightlife are limited. Female expats may feel more comfortable wearing a headscarf or full-length black abaya in public, and foreigners may be required to apply for special permits to travel outside Sana’a.

4. Buenos Aires, Argentina

Out of these 10 locations, Buenos Aires has the lowest hardship level according to Xpatulator. “Hardship level” refers to how difficult it is for expats to live in certain place. Foreign employees serving in extreme hardship areas can often negotiate higher salaries or special allowances. While Sana’a scores 40% (extreme hardship), Buenos Aires scores 20% (some hardship).

But living in Buenos Aires isn’t for “those without street smarts,” as Matador Nights editor Kate Sedgwick warns. Expats need to be prepared to deal with noise, poverty and layers of bureaucratic hurdles. Foreigners can’t sign lease agreements without a co-signer who owns property.

5. Thimphu, Bhutan

Living in Bhutan’s capital and largest city, Thimpu, is relatively inexpensive. The country still hasn’t developed a large tourism industry, largely due to the fact that foreign tourists visiting the country are obligated to spend $200 per day. Matador destination expert Tim Patterson gives the skinny in The Rucksack Wanderer’s Guide to Bhutan .

As an expat you would be able to travel in Bhutan without having to abide by the tourist regulations. Everyday groceries and housing are cheap, but eating out and staying in hotels could run up your monthly budget.

Although living in Bhutan is classified as an extreme hardship, the country has the least amount of corruption out of the 10 on this list. It comes in at 49 even beating out countries that are popular with expats like Italy (63), Greece (71) and Brazil (75).

6. Dushanbe, Tajikistan

Dushanbe has a small expat community, temperate weather and easy access to Central Asia’s Pamir Mountains. It’s a great place to learn Tajik or Farsi, although jobs for expats tend to be limited to diplomatic posts, teaching positions and humanitarian aid work.

7. Colombo, Sri Lanka

Colombo is a good base for exploring Sri Lanka and India. You can picture what living in Sri Lanka is like by checking out this photo essay or reading about a visit to a Sri Lankan tea estate.

The city has a sizeable expat community, tropical weather and uber-cheap housing, although if you to move to Colombo you must also be ready to experience monsoon season.

8. Phnom Penh, Cambodia

Cambodia and Tajikistan are tied as the “most corrupt” countries on this list coming in at 158 out of 180, and Phnom Penh is listed as an extreme hardship location. At the same time, Cambodia is a sweet jump-off point for exploring Southeast Asia, and it’s much cheaper to live in Phnom Penh than in any of the region’s other capital cities.

9. Quito, Ecuador

Expat and international investor Simon Black recently blogged about reasons to consider Ecuador. Some of the benefits he mentions are quality medical care, low rental costs and excellent fresh produce. At 9,300 feet (2,835m), Quito is also the second highest administrative capital in the world.

On the downside, the country is far from politically stable and alcohol can be expensive. In Simon Black’s words, “Ecuador is great for retirees, hermits, nomads, and internationalists. It’s terrible for hedonists.” It also scores quite poorly on the corruption index – 146 out of 180.

10. Karachi, Pakistan

Most often featured in the international news as the site of political protests or sectarian violence, Karachi is Pakistan’s most cosmopolitan city. It’s probably the only place in this officially “dry” country where you can attend an all night rave on the beach. Karachi is a major business center, has some top quality hospitals and international schools and is home to a dynamic arts scene.

That’s odd…we lived in Sana’a for some time and my wife never had to wear an abaya (the Saudi word, usually called Bolto in Yemen).

Things must have changed drastically. I do wonder what the 50 something European cougars who prowl the streets there with the low cut tops are wearing now?

http://www.expatheather.com Heather

Hey Troy,

The people I know who lived in Sana’a were women in their 20s who did wear the bolto/abaya in public (as in walking in the street). Maybe the cougars can still get away with it! I’m sure it depends on the neighborhood and where you live. I should have made clear that it’s not legally mandated.

I go to Yemen 3+ times per year for work, and I’ve never felt the need to wear a headscarf, much less an abaya. Dressing conservatively works just fine, though I have a headscarf in my bag in case the sun gets too strong. I’ve been working on Yemen for 10 years, starting when I was 30, and have traveled to many parts of the country (i.e. not just Sana’a or Aden). I’m leaving for Yemen next week, but I doubt anything has changed since I was there a few months ago.

Heather Carreiro

Thanks for sharing Ingrid! This info is so useful for people thinking of moving to Yemen.

Ingrid

p.s. Not that it adds much to the conversation, but I look a good deal younger than I actually am.

What i would give to spend a few months (years?) in Buenos Aires…great post Heather.

David

I have lived in Buenos Aires for the past 4 years. I don’t think the people that made this ranking have ever been to Buenos Aires. I could name 10 major cities in Latin America alone that have a lower cost of living.

Heather Carreiro

The Xpatulator rankings are based on 13 different “basket groups” that compare costs of things like alcohol & tobacco, clothing, communication, education, furniture & appliances, groceries, healthcare, eating out…etc. 282 international cities are ranked, so it’s possible that the other cities you’re thinking of aren’t included in the rankings (cities included are those that tend to have expat populations – diplomatic capitals, financial centers). What I liked about Xpatulator is that the rankings weren’t just based on one factor and weren’t just an arbitrary list like many of the lists out there.

Anyway, do tell the rest of us the other, even cheaper cities in South America!

Radisson

Bangkok is much cheaper than Buenos Aires. Buenos Aires is not a cheap city.

Linda

Heather, saw your tweet – which city wouldn’t you live in (I have my guess but will see if it’s right)?

Heather Carreiro

Harare. Just too unstable economically. I feel that in a situation like that it can be very difficult for expats to connect with locals since there is just such a gap due to the poverty/widespread unemployment. I also don’t have any experience living in Africa (except Morocco). Would you live in Harare?

oneoone

BA is most definitely not one of the 10 cheapest cities in the world.

http://itchyfoot.tumblr.com Sara C.

Josh – I feel the same! I’m off to Peru in a few weeks, and between this article and various other things I’ve been reading about South America, I’m starting to wish I was going to Argentina instead. Buenos Aires sounds like an amazing city, Top 10 Cheapest or not – I’m definitely going to have to get down there at some point, even though I won’t make it this trip.

Living in Buenos Aires seems like the most appealing option to me. It seems like a good place to be settled for those who would be interested in traveling in a place where there are a lot of options for side trips and travel. Although, I must say that trying to get a lease seems quite intimidating.

Great post!

Donaji

Mmmmm I also have my doubts about Quito.

I was also living there in 2004 and it was not that cheap, Central America is cheapest.

http://www.expatheather.com Heather Carreiro

Do share what Central American cities are cheap to live in! People are coming on here swearing there are cheaper places, but I have yet to squeeze a destination out of anyone. Keeping these places a secret? : )

Ingrid

Hi Heather,

Just checking in from Yemen. No need to wear an abaya, but I’m not seeing tourists either, much less tourists in tank tops (which I think is a bit rude anyway in these cultures).

Sana’a is not as cheap as it used to be, though for Westerners it will still seem quite affordable, unless you stay or eat in a Western-oriented hotel.

Ingrid

http://www.magicalurbanism.com Mike Ernst

I agree with the above comments about Buenos Aires not being one of the cheapest cities. Surely it’s very affordable given its international status, but it’s still an expensive place for most of its residents.

Great list otherwise!

Francis

Cebu is one of the cheapest cities in the world. Cebu is the second largest city in the Philippines and it has the best beaches and night life.

cheap or expensive, I will definitely want to live in Thimpu for at least a few months. it was peaceful there, not touristy, beautiful, perfect for meditation. haven;t been to colombo, but that too looks interesting.

http://globetrooper.com Globetrooper Todd

Don’t laugh, but I’m sooooo surprised how cheap Montreal is. Obviously it doesn’t come close to some of these places, but we’re talking about Montreal, a first-world, highly-developed, cosmo city. I’m from Sydney and I think I could live on half as much in Montreal.

Looking forward to living in BA later this year and maybe Eastern Europe next year. (But I’ll have to be dragged away from Montreal.)

I also just wrote a post about “The Real Cost of Living in a New City”. I wrote it because I realised you can’t just compare a basket of goods across cities. What’s the point of measuring the price of pizza in Japan if you plan on eating rice? Anyway, you can read more about my thoughts on this here: http://globetrooper.com/notes/the-real-cost-of-living-in-other-countries/

Nadeem Alim

I am from Karachi so great to see it in the top 10 cheapest cities. Yes, we are proud to be cheap! Karachi is more like the New York of Pakistan though, there are definitely cheaper cities in Pakistan like Quetta, Multan, etc. and in the smaller villages some people still live off the land and hardly have any monetary living expenses. I think that goes for most small cities in all countries, but if you are looking for a big/more developed city that is cheap AND FUN then Karachi gets my top vote.

Hmm I am not sure what they are talking about for Quito. My experience there could easily be called hedonistic! The night life scene was vibrant and alcohol was cheap. You could go out to town, have a blast, drink all night pay your cab fair to and from your destination, and even eat for almost 10 dollars US. This was back in 2006, but I loved Quito. It has great weather too! At the time I asked the people I was staying with how much an apartment was to buy in downtown and they said it was around 15 grand for something decent.

I also wandered around quite a bit and I felt very safe.

http://www.blackberryfreeware.com James T. Smith

i think including cities which are economically and politically unstable defeats the whole purpose of this article. Make a new list! You can start with Cebu ( Philippines second largest city with the best beaches in the world), Sevilla ( beautiful city in Spain cheap food and housing if your not picky).

Heather Carreiro

Thanks for the city suggestions James! I included these specific cities as the list is based on the Xpatulator rankings of cost of living for expats. I think your article idea could be “10 Lovely Cities that are Relatively Cheap to Live in”! : ) Maybe we’ll do one of those lists in the future.

http://seloffvacations.org jimmy diaz

Last month I visited a few travel destinations that I’ve found in your other posts (was looking for hotels to host our trainings at, and combined it with a week long vacation). I decided to stay in small boutique hotels in Europe, instead of huge chains, and I must confess – I had an absolute blast. Breakfasts were amazing too, and, man! – I love to eat well lol So yes, thank you for great articles!

Tatenda

Harare has improved significantly from the economic crisis. many goods and services are still very affordable. Imported goods and services are still expensive. The USD is the legal tender, but one can easily trade with the South African Rand.

Corruption is still an issue.

Mami

I live in Karachi Pakistan ,from here which is the cheapest country to visit

aaron

Karachi’s number for corruption must have been so high off the charts they didn’t want to list it.

chrisgal22

in fact the corruption in karachi is one of the highest in the entire world

Letsgo81

What are you thoughts on living in the Philippines?

http://www.crazysexyfuntraveler.com crazy sexy fun traveler

I haven’t been to any of them, but as I see this, I should go soon Budget travel

EvaBenz

The number of problems stated above are true about Harare but the beauty it withholds surpasses the negative points the city carries. The ample number of allurements makes it possible that travellers from various destinations visit Harare in order to spend their holidays in Zimbabwe and most importantly the trip is quite inexpensive for most of the travellers.

JD

I’ve traveled to some pretty cheap places, but found that foreigners are charged more than locals. It turns out the cheapest living can be found right in my backyard. Their is variety, little fear for my safety, the comfort of just being fluent in the language and customs is huge, no visas to worry with, no expensive shots or travel tickets. I absolutely recommend the U.S.A. and Canada for English speakers for the cheapest finds if you are willing to look. Try Craigslist, and search for rents location by location. Go stay at hostels. Heck, I just bought a bankowned house on 5 acres for $20K, and it’s 15 miles from the beach! The deals are here, and without living in fear of anti-Western attacks.

Internethatred

This is a great page with interesting links – thank you Heather : )

Andy Barge

Thank you for the good read, Heather.
Your article is especially of interest for those who consider moving to a cheaper place to get the most out of their income, such as pensioners or freelancers who can work anywhere in the world.
Unfortunately, Asuncion – the capital of Paraguay – is not mentioned. Incidentally, Paraguay has no income tax and the prices for food staples and real estate are considerably cheaper than in most places of the world. Imagine the value added to your lifestyle whilst domiciled in Paraguay.
There is another good thing about Paraguay: it’s relatively easy to become a resident, Western foreigners are welcome in this country.
The only letdown is that English is not on the list of languages spoken in Paraguay. Languages in which to address locals are Guarani, an Indio language of Asian origin, and 18th century Spanish. Roughly five percent of the population speak German.
As for corruption, it had been rampant but now it is on the decline.